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Travelers Indem. Co. v. Dingwell

The court rules that three insurance companies are obligated to defend the holder of liability insurance policies against a class action for damages allegedly resulting from insured's contamination of well water. The court first tolds that the complaint in the groundwater pollution case generates a duty to defend because it discloses a potential for liability within the coverage and contains no allegation of facts sufficient to exclude coverage. Applying the "comparison" test, in which the terms of the policy are matched with the complaint, the court finds that a general allegation of negligence is sufficient to raise the possibility that the pollution releases were "sudden and accidental" or "unintended or unexpected," and thus within exceptions to the policies' provisions excluding most pollution incidents from coverage.In addition, the court rules that the companies are not excused from the duty to defend by a provision in one policy excluding from coverage damages resulting from conditions in violation of governmental rules and regulations. Relying on the plain language of the policy and the policy of liberally construing such contracts to the benefit of the insured, the court finds that the exclusion provision is limited to damages resulting from the insured's actions which themselves violate the law. Thus, although the results of insured's action in this case (pollution of an aquifer) may have constituted a violation of state nuisance law, the exclusion does not apply, because there is no allegation that the discharges themselves constituted violations.